The Managing Director of Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim says “the recent experiences of technology giants selling consumer data without consent or authority is cause for concern.”

Speaking at the Kaduna Run of the 2020 NDIC Workshop For Business Editors, Finance Correspondents Association of Nigeria (FICAN) and other stakeholders under the theme, “COVID-19 & FinTech Disruption: Opportunities & Challenges for Banking System Stability and Deposit Insurance,” Ibrahim said “the increasing sophistication and proliferation of technology in banking operations also ushered in unintended consequences like operational and legal risks, as well as the security of consumer personal data” and that “managing the risks associated with emerging technology without stifling innovation has become a major theme amongst regulators and policy makers.  In Nigeria for instance, the Central Bank recently released a draft framework for regulatory sandbox operations to encourage innovation, especially for Startups. The NDIC equally established an ‘Innovation and Fintech Unit’ to drive its agenda for emerging technology and provide solutions to improve the safety of depositors and the banking system.”

According to him, “there are two main concerns for the Corporation on Fintech: these are how to identify and insure non-bank deposit taking institutions licenced by CBN and other Agencies e.g. SEC. Currently, there is an ongoing engagement with the relevant regulatory agencies on how to actualise that within the limits of legal provision.  The second is how to tap into the potentials of Fintechs to effectively execute its business processes easily, speedily and reliably.  Consequently, we look forward to modernizing our data collection and analysis through the use of Fintech solutions/tools (Regtech and SupTech) to handle the following business processes better than currently being done:  Risk Based Supervision (RBS), Monitoring Compliance, Premium Administration, Early Warning Signals, Stress Testing, Analysis of insured institutions’ performance  etc.

According to McKinsey & Company, Nigeria is now home to over 200 fintech standalone companies, plus a number of fintech solutions offered by banks and mobile network operators as part of their product portfolio. Between 2014 and 2019, Nigeria’s bustling fintech scene raised more than $600 million in funding, attracting 25 percent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone—second only to Kenya, which attracted $149 million.

From the foregoing, it becomes evident that the theme of this conference is informed by emerging developments in the Fintech space and the expected long-term effects of the pandemic on the financial system, which will largely be determined by our actions in promoting innovation while also strengthening bank stability.”

FinTech is simply the common term used to describe the technology (internet, mobile devices, software app, cloud services and many more) that are used in delivering important financial services that were exclusive to traditional financial institutions. Despite promising innovation and economic growth through disruption of traditional finance, Fintech disruptive financial services such as chip-based debit/credit cards, mobile and web-based payments cloud computing also poses a major challenge to the regulatory paradigm.